INFRASTRUCTURE, ECONOMIC GROWTH AND TRADE IN SAARC

This article examines the critical relationship between infrastructure, economic growth, and intra-regional trade within the South Asian Association for Regional Cooperation (SAARC). It argues that the poor state of physical infrastructure, particularly in transport and communications, is one of the most significant barriers to both national economic growth and effective regional integration. The study analyzes the "infrastructure gap" in South Asia, comparing the region's infrastructure stock and quality with that of other more dynamic regions, such as Southeast Asia. The research explores the strong causal linkages between infrastructure investment, productivity growth, and a country's ability to participate in international trade. The paper posits that a coordinated, regional approach to infrastructure development, such as the creation of trans-national transport corridors, is essential for unlocking the potential for intra-SAARC trade. The analysis concludes that a massive and well-planned investment in regional infrastructure is a prerequisite for the success of any trade liberalization initiatives like SAPTA or the proposed SAFTA.

Economic growth and trade do not occur in a vacuum; they depend on a foundation of adequate physical infrastructure. This paper provides a comprehensive analysis of the critical role of infrastructure in the context of the SAARC region. The study begins with an assessment of the state of infrastructure across South Asia, highlighting the severe deficits in key areas such as roads, railways, ports, and energy. It argues that these deficits act as a major brake on economic growth by increasing the costs of doing business and reducing the competitiveness of the region's industries. The core of the article is an examination of the specific linkage between infrastructure and intra-regional trade. It demonstrates how poor transport and transit logistics, cumbersome border procedures, and a lack of connectivity make it, in some cases, cheaper for a South Asian country to trade with a distant country in Europe than with its own neighbor. The paper argues that tariff reductions under SAPTA would have a very limited impact as long as these fundamental physical barriers to trade remained in place. In its concluding section, the paper makes a strong case for a regional infrastructure master plan. It explores the concept of "growth corridors" and advocates for a coordinated, multilateral approach to investing in the cross-border transport and energy infrastructure needed to create a genuinely integrated South Asian economic space. The findings suggest that prioritizing infrastructure is the most critical step SAARC can take to boost both national growth and intra-regional trade.